A legal threat made against a weekly newspaper in a bid to force it to reveal sources has been dropped.

As reported earlier this month, the Croydon Advertiser had faced the threat of court action by administrators of a private coach hire firm unless it revealed the sources for in investigation into why its collapsed.

It set a deadline of 18 March for the paper to comply with the demand, which it publicly refused to do.

Now solicitors representing the administrators have written to the paper confirming no further action will be taken.

FRP Advisory, the administrators of Ruskin Private Hire, had previously written to the paper requesting it hand over all documents and stop writing about the company or face court action.

The threat followed a special report by reporter Gareth Davies into Ruskin’s claim for £2.5m compensation from Croydon Council.

Former senior employees of the firm who spoke to the paper anonymously blamed its downfall on the council, which employed the firm to transport disabled youngsters to and from school.

It was seeking compensation following losses incurred as a result of the termination of its original contract in 2010, after serious flaws were found in the way the authority outsourced the service.

A spokesman said: “FRP Advisory confirms it will not be taking any action against the Croydon Advertiser while they review information which the joint administrators have recently located.

“The joint administrators reserve their rights pursuant to their relevant statutory duties to take such steps as are necessary in the future.”

Advertiser editor Glenn Ebrey told HTFP: “I’m delighted to hear that, at this stage at least, FRP has dropped its threat of action.

“One of the core foundations of all good, public interest journalism is the ability to protect whistleblowers and sources and, whatever other changes come our industry’s way, this fundamental principle must be retained, especially if it helps produce the sort of vital information Gareth’s story did.”